Which of the following best defines rational behavior?
A. Seeking to maximize total gain regardless of cost
B. Analyzing the total gains from a decision
C. Seeking to gain by choosing to undertake actions as long as the marginal costs exceed the associated marginal benefits
D. Improving net gain by pursuing decisions as long as the marginal benefits exceed the marginal costs
Answer: D
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Assuming a long-run aggregate supply curve, a decrease in government spending results in ________ in output and ________ in price level
A) no change; a decrease B) an increase; no change C) no change; an increase D) a decrease; a decrease
Which of the following is not a consequence of the Fed changing the reserve requirement?
A) Changes in the ratio are easily incorporated into banks' routine management. B) Changes in the ratio effectively places a tax on banks' deposit taking and lending activities. C) Decreasing the ratio will increase excess reserves. D) Increasing the ratio will decrease the amount of reserves banks have to loan.